Private Lender (Down Payment) + Portfolio Lender Financing

[Dustin Summers]

Hey Team

The short version:

Who do I talk to about a deal where I have a private lender providing the downpayment and a standard portfolio lender providing the rest? Do I need to tell the portfolio lender that someone else is providing this down payment at closing and will have a lien in the second position on the property, or is that all just handled by the Title company at closing and the lender/seller doesn't care where those funds come from? Should the title/closing attorney be able to handle all of this?

Long Version with details:

I have an off-market duplex I'm looking to get under contract for 145k (talked the seller down from 150k). This is more of a turnkey rental, so no major work needs to be done for this property as it was recently updated. I have a private lender who is willing to loan me the down payment of 20 - 25% (29 - 36k) with a lien in the second position on the property. The rest would be provided by a portfolio lender. This is my first time doing this type of thing, as I've provided the down payments in the past...

The house is fully rented earning $1,700 a month.

My payments, with Insurance/Taxes + the Downpayment loan, are below(assuming 80% financing from portfolio lender at the moment): 

80% Finance(30 yr @ ~7%): $1,105.08

20% Loan(10 yr @ 8%): $352.00

Total: $1,457.08

Initially, it's earning ~$250.00 a month after all is said and done, but the plan would be to aggressively pay off the down payment loan to free up the other $350.00 cash flow, increasing that to ~$600.00 a month.

Thanks for any help in advance!

[Chris Seveney]

@Dustin Summers

Yes you need to let the both lenders know about the loans.

In many instances the first will not allow a second if it’s 100% financing because then you have no skin in the game.